Netflix switches to all-cash bid for Warner Bros Discovery assets amid rival interest

Netflix has revised its offer for Warner Bros Discovery’s studio and streaming assets, switching to an all-cash bid without increasing the overall value of the deal, according to a regulatory filing on Tuesday, reported by Reuters.

The revised offer values the transaction at $82.7 billion and prices Warner Bros shares at $27.75 each. The filing said the all-cash proposal has unanimous support from Warner Bros’ board.

Netflix and Paramount Skydance are both seeking to acquire Warner Bros for its film and television studios, content library and franchises.

Paramount has revised its own offer and launched a public campaign to argue that its proposal is superior, but Warner Bros has rejected the bid led by David Ellison.

“Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty,” Netflix co-CEO Ted Sarandos said in a statement.

The streaming platform’s new offer replaces its earlier cash-and-stock proposal of $23.25 in cash and $4.50 in Netflix stock. Its shares have fallen nearly 15% since the merger was announced on December 5, closing at $88 on Friday, below the original bid’s floor price of $97.91. Paramount has cited that decline as part of its argument that its offer is more attractive.

“The merger consideration is a fixed cash amount to be paid by an investment-grade company, providing (Warner Bros) stockholders with certainty of value and liquidity immediately upon closing the merger,” Warner Bros said.

The Warner Bros board also disclosed its valuation of Discovery Global, a planned spin-off that would include cable television assets such as CNN, TNT Sports and the Discovery+ streaming service. Advisers valued Discovery Global using three approaches, with estimates ranging from $1.33 per share to $6.86 per share if the unit were involved in a future transaction.

Warner Bros has said the streaming platform deal is superior to Paramount Skydance’s $30-per-share cash offer because shareholders would retain a stake in the separately listed Discovery Global. Paramount has argued that the cable spin-off is effectively worthless.

Paramount Skydance sought a court order on January 12 to force faster disclosure of information related to the competing bids. A Delaware judge rejected the request, ruling that Paramount had not shown it would suffer irreparable harm from the disclosures.

Paramount Skydance’s tender offer expires on January 21.

A shareholder vote on the transaction is expected later this year as Warner Bros investors weigh the value of its cable television assets.